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tv   Fast Money  CNBC  June 27, 2013 5:00pm-6:01pm EDT

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welcome live from the nasdaq market site in times square this evening. i'm scott wapner. our traders tonight, steve gra sow, dan nathan anthony scaramucci and guy adami. we get straight to the big story. rally mode. the dow and the s&p posting their biggest three-day gains since the beginning of the year. in fact, the dow is back above 15,000. there's only one trading day left in the quarter so it's certainly going to be interesting. want to know what you guys are doing as you watch this rally, maybe it's caught some people by
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surprise. guy? >> it shouldn't. judge, we talked about this on monday. we said the s&p traded down to past resistance. past resistance becomes support. we talked about it trading back to 1620 by week's end. here we are now. i still think last week's outside week technically was very destructive this terms of how the market sets up. i think we'll make a push maybe towards 1625 tomorrow. i think you can trade from the short side against that judge. >> anthony, you have been skeptical that the market could rise without the liquidity driven fed behind it. seems like the market may have overreacted to the fed speak of last week. >> you saw terrific jaw boning from an old colleague, bill dudley today. yesterday he gave a very impressive speech. he was indicating through the whole period of time, and you see the market is only rallying and then you also have the window dressing issue that guy and i have seen on trading desks all over wall street. tomorrow is the last day of the trading quarter, and my guess is the market will head higher here in the near term but i am still
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convinced that if the fed came out and made an announcement they were stopping the $85 billion of purchases or cutting it in half, you would see a major retracement. >> and they did indicate that. last week -- >> they didn't do anything. >> they didn't do anything. >> he's not raising rates. >> when you think about it, when we saw the movement in it's ten-year in the yield, it went from 1.60% in the last month to 2.60%. i don't think the market will give them a pass. when i think about what's going on in the last week and a half we had this magnificently horrible incoherent message from the fed. last week it was hawkish this week it was really dovish. we had that big sell-off and then we bounced off the technical levels guy just mentioned. when i look at the s&p and i'm shorting it, i started spy puts in july and i legged back into it. i'm very mindful of that 620 50-day moving average but i think we're in a down trend off that may 22 high. i think we will continue to make lower lows.
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when we break 1550 that level we bounced off of, i think we see 1500 in the s&p. i think that's a 10.5% peak to trough sell-off and i think that's probably when it's okay to step in. >> just to your point though they have been extremely confusing on their message so the market truly doesn't know what to do here but i do think we're heading back down. i think ultimately we'll test 1555 and then we'll see where we go from there. that's where i would feel better about buying into this marketplace. >> haven't they made i guess a conscious effort in the last 24 to 48 hours to let the market understand better where they're coming from? >> i think they've made a conscious effort to say both things. they could be hawkish -- >> i don't think that was the mode today. dudley was about as dovish as you would want anybody to be. >> ben bernanke in front of the whole press corps and they got to ask him whatever they wanted. what was the message that came out? it was clear as mud. owe
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to me i think we will have this for the next few months. we have jackson hole where bernanke won't be because the frez fired him. we have the fed meeting in september. >> this has more to do with i think, quarter end than i think it has to do with the fed at this point because even though we have a daily -- >> you mean the rally this week. >> i agree. >> i think that the fed was -- i said it the last time when you were on the show last week, i said it's going to be a sell the news type event. i think that still stands. i think you will see the market stort of drift off. going to be a lot of people away next week. i think a week and a half is going to be the true test. >> mikey, what do you think of the commentary on the desk? do you agree or disagree? >> no i agree with it. i think if you're looking at ways to sell the rally maybe one of the better places to start would be taking a look at some of the names that are kind of hard to justify on a fundamental basis that have rallied strong and through the year and particularly through the last quarter. names like best buy, netflix i think we basically have pretty much topped out here. i think that's a place you might want to look to take some
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profits. schwab is up somewhat inexplicably to me. take a look at names of people who have had the good fortune to ride quickly until the end of the quarter. thank the stars for your opportunity to hit that bid. >> let's bring in ed the legendary market watcher. he's been listening to the conversation. >> i agree with all of you, by the way. >> you can't. >> and i agree with -- i'm a very agreeable person. >> you're positive on the market though. >> i am. i think there was a mention of liquidity. i think the main source of liquidity for this stock market this bull market the stocks we've had for the past four years has been corporate cash. corporations are chock-full of cash. their corporate cash flow is $2 trillion over the past four quarters. the amount of cash they have on their balance sheets is pretty close to that. and they don't know what to do with it. >> ed, doesn't that make you nervous this they don't know what to do with it?
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they don't know how to deploy that cash to grow earnings in an efficient manner. they don't want to hire because they're worried about demand. i know you look at the world. what percentage of s&p 500 profitts come from around the world? >> half. >> half. and they're looking at it and saying, wait a minute china's gdp is probably going to be cut in half -- >> let me jump in. but the reality is they've been buying shares and the reality is over the past four quarters through the first quarter they bought $700 billion of shares and paid out dividends. so there's an amazing amount of cash coming in. since the beginning of the bull market, they put $2 trillion into the bull market through share repurchases and dividends. it matters. and when they do the buybacks the earnings per share goes up. i am concerned about the issues you're raising. revenue growth doesn't look very good. earnings growth doesn't look great if you do it on an aggregate basis. >> let's talk about what doesn't look great also. as dan just mentioned, china,
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maybe credit issues there. japan, the volatility there is disturbing to say the least. >> sure. >> europe is still a mess. nothing has been solved there as far as i can tell. and you have emerging markets which bounced over the last week or so but that's been a disaster. >> i think there's two major investment strategy options here. one is stay home or go global, and i have been promoting stay home. i mean, the wor worse things look overseas i guess at some point if it's really bad overseas it could hurt us, but the reality is aeshings per share are growing. the economy is chugging along at 2%, not great, but it's doing it p.m. take out government spending, we're actually growing 3%. we've been doing that since 2010. the headlines are driven by the fed news by the china news but the reality is most of us are just getting along with our business and we're doing pretty good. >> are you a believer in these past three days? i mean the market, it's almost followed this pattern. the market has had these
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pullbacks. granted, this one has been a little steeper than the others, and everybody is calling for a huge correction. this is it. this is the big correction that we've been waiting for. every single time the market reverses and goes higher. >> this is all serious stuff but sometimes you have to have a little bit of a sense of humor. on tuesday the market was up because the economic indicators were better than expected. on wednesday the market was up because gdp was revised down sharply. that's pretty funny stuff. the market can go up on good news -- >> good -- >> i was looking for 15965 and we're here. i wouldn't be surprised if your technical work is correct and we go sideways. >> you have very offensive plays. >> they're not as offensive as the defensive stocks have been very expensive, as you know. some of them corrected pretty
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sharply here. but i think the stay home theme leads me to the consumer in the u.s., leads me to the financials in the u.s. and i'm playing kind of a chicken approach to the global economy with industrials staying away from materials and energy. >> ed, you have seen a lot of markets. you have a long storied history on wall street. what does that market remind you mops of in your career if at all or is it a totally unique market? >> it's very interesting. if you put the s&p 500 from 2009 to now on top of a chart of the s&p 500 from 2003 to 2007, they're almost identical except for the fact that our market has gone to a new record high so i'm encouraged by that. >> but after 2007 it was another funny year called 2008. >> yeah. you look at that chart and you could -- >> are you worried about something like that or we don't have the leverage profile? >> well, you know we've gone from worrying about a meltdown in the u.s. in 2008 to a
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meltdown in europe over the past few years. now we're worry being a meltdown in china. >> not a meltdown -- listen, i think they're doing everything right. i know steve has a question but i think they're the best capitalists in the world. my problem is -- >> the chinese? >> yes. >> we can have another discussion on that one. >> that's 100% true. they're doing exactly everything properly. i wish we were more like they were. >> crony capital i remembermpimp maybe. >> does -- if that's a questionable variable we see get pulled out of the market does one of the pay lars leave? >> there was one of the discussions about -- corporate cashing flow, if that blows up, then the market would be in a bear market. the recession would blow up if the global economy takes a dive and we can't help but be part of that. >> ed, appreciate it very much.
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>> ed yardeni live in times square. doubleline capital's jeffrey gundlach is hosting a conference call with investors. mary thompson is here with the latest. >> with $60 billion under management it's worth listening into this call which continues. building on what gundlach told you today earlier that the liquidation cycle has run its course, gundlach repeated that july should be a less volatile month for the markets. even still he said gold right now, quote, looks like death, unquote, that the charts suggest it could fall to $1,000 though he said the upside is about 15%. he could see it rebounding to up to $1,800. gundlach saying with the lick inquire dation cycle over so, too, might be the outwe are formance of the s&p over emerging markets equities at least in the short term. >> should outperform the s&p 500 in the weeks ahead. i think -- if i was going to
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make a contrarian play and try to play reversal, i wouldn't use gold so much. i think i would use these emerging market equities versus the s&p 500. >> as for the s&p, he says it's already starting to recover obviously as we have seen over the past couple days. could climb to 1650. the nikkei, he said that could fwouns bounce to 14,000. he's row kated sometated some money into fixed income. he said inflation had nothing to do with the recent sell-off, that rates won't rise in large part because the fed doesn't want higher rates to hurt the economy. one area he said a ten-year treasury at 2.65% would hurt housing which could hurt the economy so the fed is unlikely to do that. he doesn't expect tapering to be a problem. he said basically what the fed is trying to do, it's responding to the decline in the budget deficit so, therefore, it will be buying fewer bonds as the budget deficit declines. he thinks qe will continue he
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said until it's perceived to have bad developments. unaffordable housing prices or too much leverage in the financial markets. again, the call continues. if there are any other headlines, i'll bring them to you. >> mary thompson thank you so much. guys, what do you think? let's take the gold going to $1,000 call. does anybody on the desk think that part of the reason that the stock market has done quite well over the last three days is some of this extreme selling in gold is finding its way into stocks? >> i do think that's the case. there's obviously gold, it had the whole currency thing going and the money printing thing. then people realized that wasn't having a super big impact. we have more deflation than inflation, and now there's been a tactical asset allocation shift into stocks so gold has lost favor for the near term until something happens. >> emerging markets. guy, is that the place now to start looking. >> i don't believe so. i think the bounce is exactly that, a bounce. i think there's still some disasters out there, so i would
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just like in the s&p, i think you will have an opportunity to get shors once again. i think the same thing sets up in the emerging markets. >> the nikkei. dan nathan. the biggest gain out of the best 13 days. >> i think it's pretty bullish that japan is really off the front page. we're dealing with things over here right now. so the last couple weeks we were watching every move in the nikkei. it was moving 5% a day it seemed like both ways. to me i think the volatility has calmed down just a little bit. that's a good thing for u.s. markets. i don't really think that japan's going to pull back anytime soon from what they're doing for their own stimulus. >> grasso, i will let you have the last word. you can take gold, em or japan. >> i think dan brings up an important point. if japan is off the front page now, what happens when it gets back on the front page? what happens when we sift through all this stuff? what happens when japan comes back, china comes back europe comes back, and now we started to enter into earnings now which we're going into in july.
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what happens then where i think the glass probably isn't as half full as we think it is. >> i would flip your point, maybe it's better to have japan on the front page as the nikkei doing well rather than china on the front page doing terribly. i just throw that out. >> fair enough. >> shares of nike trading higher. very agreeable. after a strong earnings report. the traders will take their position. later, it's not just fun and games for this company that's up more than 60% already this year. find out if you should stick with this big winner of 2013 in the second half of the year. plus baggage fees reservation change fees, and not enough leg room. phil lebeau has the latest on the pain trade in the airlines. >> you will not believe the latest numbers we have in terms of how much money the airlines took in and guess what? for one airline, they made more with a different kind of fee than baggage fees. what was it? we'll tell you in just a bit. ght the best part about this country is that we get to create our future.
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you get to take ownership of the choices you make. the person you become. i've been around long enough to recognize the people who are out there owning it. latest numbers we have in terms the ones getting involved and staying engaged. latest numbers we have in terms they're not sitting by as their life unfolds. and they're not afraid to question the path they're on. because the one question they never want to ask is "how did i end up here?" i started schwab for those people. people who want to take ownership of their investments like they do in every other aspect of their lives. latest numbers we have in terms
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latest numbers we have in terms welcome back to "fast money." i'm jackie deangelis. nike earnings out. fiscal fourth quarter revenue coming in at $6.7 billion. slightly higher than expected. the company's eps 76 cents. that was a 2 cent beat. futures orders a highly watched
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metric up 8% in line with expectations. gross margins, expansion of 110 basis points for the quarter. 43.9%. for the fiscal year 10 basis point expansion. the conference call is happening right now. analysts will be looking for color on china as well as the company's outlook. >> thanks so much. there were a lot of naysayers going into this quarter, guy, including i know josh brown is probably watching somewhere. on our debate on the halftime show he was the bear. he won the debate according to the viewers which tells you there's a lot of negativity out there. what's there to be negative about this? >> i'm looking for it. i really can't find it. even western europe was better than expected north america was better. gross margins better than expected. if you want to punch any holes in the nike story and people will come at you valuation at 20 20.5 times forward earnings people make theament it's rich but they seem to be a great their inventories are in line.
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>> let's move to the next trade. the unfriendly skies. are you sick of getting nickel and dimed by all of those airline fees? well bad news because it's become big business. our phil lebeau joins us from chicago, and, phil i mean with all these fees, there's a reason why the business proposition for these airlines has improved. >> and a reason why they turned profitable in the first quarter. seven of the nine major airlines in this country posted a profit in the first quarter, scott. and here is the reason why. we just received numbers today from the d.o.t. in terms of how much money the airlines took in when it comes to bag fees and reservation change. let's start first off with bag fees. this was the big moneymaker for them. $800 million in the first quarter. that's an increase of 1.85% compared to the first quarter of 2012. delta leading the way bringing in $191 million in bag fees and then when it comes to reservation change, well this is where the airlines are really going to town. $685 million is how much they took in during the first
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quarter, an increase of 7.9% year-over-year, and delta made even more money with reservation change fees than it did when it comes to bag fees. $198 million. but altogether you take it all together, it's $1.485 billion the airlines took in and yet they reported a net loss in the first quarter of $433 million. yes, they reported an operating profit but a net loss of 433. total revenue in the first quarter, $34.1 billion. scott, we have said this before and we'll say it again, these numbers are just the beginning. you have packed planes and you've got a limited supply there. so people who are flying are really going to have to pay to check their bags or if they have to change, they're stuck. they have to pay $150 or $200. that's just the way it goes. >> and investors, phil in these stocks are going to enjoy the increased gains if the businesses continue to be as strong as they have been. you're not going to be able to have it both ways right?
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>> absolutely. this is exactly what investors have been clamoring for and what you pay the executives at the airlines to do. they're paid to make a profit. they are paid to come in and get as much money as possible. they are not paid to guarantee an empty seat next to you. those days are long gone. yes, this is why investors are pleased with what they're seeing from the airlines. >> the airlines, do we like them? >> i think the way to play them i have sat down stream for a while. airlines are interesting but look at precision cast parts, a name we have talked about forever. it's a down stream play. an all-time high again today. it might be rich valuation. that's been a knock now for the last $100 in the stock. so to me the airlines themselves are far too volatile. i would rather be down stream. >> what about the airlines themselves? >> i like the charts on the airlines. >> what's not to like. >> the odd thing for me is what's -- where is the variable with fuel? it just seems they've been
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rallying without respect to fuel prices, and they managed to overtake that, so i think they could still go forward and move higher. >> let's roll with something else. can you throw up a chart of pfizer after hours? i'm sorry to throw a curveball here but we saw that pfizer to your point grasso earlier, had announced this $10 billion stock buyback. here we go again. >> right. >> the market had come in. now they announce a bit of a buyback. look at what the stock is doing after hours. 1.5%. this being one of those catalysts for why the stock market was doing so well because you had company after company coming with the buybacks. >> i think it's a tremendous reason why the stock market has been doing well. people see that, put your money where your mouth is, and they like to hide behind that like to buy stock where they're soaking up that float. but the truth is if they could find another way to deploy capital or if rates rise and they can't borrow to do their buyback, it will be a huge question. >> these are safe names. here is pfizer, 3.4% dividend yield. they have a $10 billion share
5:23 pm repurchase. you don't have a ton of risk. they are trading at 12 times on earnings that will go low single digit. >> but there's no top line growth. companies are having a hard time making money in an environment like this. why are there no acquisitions. if the market is so healthy fundamentally and it hadn't a liquidity driven bull market why are there no acquisitions? >> they're putting all the money in buybacks. >> should you hold or fold one of the best stocks of the first half of 2013? a top analyst makes the call on a video game leaving its competitors in the dust. plus, from the gold miner bounce to the best three-day move for the banks of the year. we are hitting our top three trades in the biggest pops and drops in today's session. we're back in two. people are never happy with the way things are. and are always dreaming of how they could be. smarter, simpler, how-on-earth-does-it-do-that... er. and they make it that way. because things can always be better.
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♪ ♪ helping this big country move ahead as one ♪ ♪ norfolk southern how's that function? ♪ let's do our top trades for today. first up the gold miners. even with gold falling below 1200 bucks since the first time since 2010. all finishing firmly in the green. grasso? >> if they're going to be cutting -- see, the difference between a miner and bullion is
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that the miners are masters of their own destiny. they can cut production. that's what you will start seeing here across the board. that's why the miners will outperform the actual metal and that's what happened today. >> but it hasn't. >> it hasn't. on the way up. on the way down it will go down a lot further than the metal but on the way up that's why miners will pop more than the actual -- >> credit to dr. j as well who was talking about this yesterday. again even as gold is down miners up. next up, financials. the s&p financial sector spiking more than 4% in the past three days making it the best performing sector in that time frame. >> which makes a lot of sense, but i was looking for banks that were doing well when the market was melting down last week and if you look, we say it all the time. we'll mention pnc because you have to mention it. look at u.s. bank corp what that stock did while the s&p was trading down. it was within a whisper of an all-time high. another 52-week high today and here is a bank that's within a
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couple percent of its all-time high. it works. why? >> solid management. >> cable stocks mike? >> you know it's really interesting. obviously with the malone conversation about potentially doing deals, that gave a big lift to these stocks but it also gave a big lift to options premiums. some of these things have rallied nicely. you might want to take a look at selling upside calls. take advantage of the fact there's a little speculation here and don't get overly enthusiastic and chase the stocks themselves. >> we're nearly halfway through the calendar year and all week on "fast money" we're profiling the hottest stocks so far of 2013 with analysts at the top of their games. today the stock is gamestop. it's stock price has risen more than 60% year-to-date. michael pakto r has had an outperform since 2009. welcome back. good to talk to you as always. >> thanks for having me. >> so you have had a buy on this
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for a long time. stock has done well. why does it continue? >> you know, if you look at the games industry, it peaked in 2008. it's declined about 40% since. if you look at gamestop revenues in 2008 $8.8 billion. in 2012 $8.9 billion so they have picked up a ton of market share and we're now right on the edge of new consoles coming out for their core customer which is the xbox one and the playstation 4. they are going to thrive when game sales rebound and i actually think game sales are going to rebound. i think the stock was weak because people feared digital downloads. all three consoles out in the market are using disks, so they're not encouraging digital downloads, although of course they're possible. the used game market is going to be protected. microsoft threw a scare out there and they've retracted that statement. gamestop is diversifying its business into used consumer
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electronics selling ipods. they return all cash to shareholders. >> michael, great to have you on board. i like gamestop end of earnings. i thought with the short interest it had and the valuation not being rich at all you would see a spike. try to put your trader hat on because i agree with everything you have just said. the digital downloads seem to have come and gone and gamestop is still standing. why the 30% short interest? what do they see the rest of us don't see? >> you should ask ian our head of trading about my trading sales. i absolutely suck. >> i'm sure you have some reasons in your head why people are betting against this. >> the shorts honestly i think they're a bunch of rich guys who think everybody would prefer to receive everything digitally. they watch their movies on demand, get their music downloaded and they think it's inevitable that all consumers will do. the difference in games from the
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other types of entertainment media is that there's a robust used market for physical goods, and it provides about $1 billion of currency to gamestop customers. >> but that's the same argument you could have made about dvds ten years ago. >> but nobody trades -- nobody sells used dvds. they don't provide currency to buy new ones. >> of course they did. you just laid one of the pillars of the case that they're selling used tablets. my god. what is this like a flea market here? i know you have been in these stores. these are disgusting stores. >> i need to correct a misperception that you and a lot of rich guys have. >> my kids -- i have kids and my kids will never buy a game. they will download it from here on out. >> people who don't have jobs and are still in school don't have credit, and they're not allowed to get credit cards. the credit card companies won't give it to them. they need currency. they can't buy an iphone because
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they can't get the post paid plan because they don't qualify. so they have to buy a used iphone if they want one and they have to pay for a prepaid plan. it's actually a thriving business. as far as used games, those things -- the average used game generates $12 to the person trading it in. that's 20% of the cost of a new game. it's big business for gamestop and it matters to 14-year-old boys. >> yeah. mike, thanks so much. good to talk to you, as always. michael pachter. >> what's the beef? >> it matters to 14-year-old boys. >> what's the beef? the stock tells the story, doesn't it? >> it was left for dead last year and you're not telling me anything has really changed whatsoever as far as the console business. remember, they -- they just came out with two -- >> he just said -- he was like using a class warfare argument. the xbox is $500. how many 14-year-old kids who don't have rich parents can afford an xbox console? it's a ridiculous argument. >> i don't think he was using a class warfare argument.
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the expectation management on this thing is that everyone is short. it's game over for them. they're going to end up like borders bookstore but they're doing something interesting with the second hand market that's very high profitability. >> anthony, they have been doing this for years. >> did you used to work at blockbuster or something? >> how much longer -- >> he's got some -- >> how much longer is it three years, five years, ten years? that's how you playg gme. with a 30% short interest it's impossible to short. >> mike, do you have a quick thought. >> i have a couple thoughts. one of the reasons you're seeing that increasing short interest and i'm going it put my trader hat on since that's what i am there has been a decent amount of options trading. what we are seeing is some people who are probably experienced some of the rally are skeptical about the long-term prospects. those people are going out and buying puts. when you buy puts, the people who sell them hedge. they have to short the stock. the other thing that you've been
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seeing and actually the biggest trade we saw today was people selling the january 14 42 calls. the stock is up from 25 at the beginning of the year. they take that in. the worst thing ha happens is the stock gets called away at 42. but the guys they're selling the calls to, what are they doing? shorting the stock. you have to understand there's a lot of market participants. not all of them are making directional bets on the stock. some of them are hedging. >> i'm going to do a case study on what happens to you when you eat a whole pack of energy gels before the show. >> sorry about that. >> coming up find out if the technicals are flashing the green light for the stock rally. >> do some traders get a sneak peek at market moving information before do you? eamon javers has been all over this story and he has the latest developments and that's coming just after the break. ♪ ♪ [ cows moo ] [ sizzling ] more
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but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪ ♪ welcome back. want to show you another stock that is on the move and moving sharply lower in the after hours session and that is acn, ak ken
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accenture accenture. after the company says the sales forecast is going to miss expectations. do you have a comment 1234. >> the stock is down 5%. think ibm. they get half their sales from overseas. ibm is down a couple bucks also in sympathy. new developments on a story we broke first earlier this month. a handful of high speed traders acted on the may ism number before it hit the market after thomson reuters mistakenly sent the information. our own eamon javers will be leading the reporting on this story. he joins us with the latest. eamon we say we break it but in reality you broke it. what's the latest? >> cnbc has learned that the s.e.c. is now looking into the relationship between thomson reuters and ism in the wake of our reporting that thomson reuters accidentally earlier this month sent out some of this ism manufacturing data just about 15 milliseconds early before it was officially
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scheduled to be released. that had a big market impact. trade whose got that data the high speed subdescribesers to thomson reuters premium service were able to trade immediately on it and make a profit before the rest of the market realized that was even out there as data in the market. just that 15 milliseconds in this day and age means a lot. what the s.e.c. has done here we're told by the ceo of ism has asked is m and tampson thomson reuters for a company of the contract. i'm told they turned over a redacted version of that contract and we'll try to get more information from the s.e.c. they've declined to comment to us officially. thomson reuters not immediately responding for a request for comment. >> another development in a story he's been out in front of. our next trade, the markets are in rally mode. what are the technicals saying. let's go off the charts with chris varone.
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good to have you here. >> nice to be here. maybe the technicals are more important than ever before given what we've done over the last week in the stock market. what can you see? >> first and foremost and most importantly, the trend of the market is still up and still healthy. now, very curious thing happened this week at monday's low. when we made this call it 1560 low earlier in the week you had half the s&p 500 trade to a 20-day low. historically that's been a very buyable circumstance. we got the same signal july of last year, november of last year, and february and april earlier this year. when we see about half the market maybe a one-month low historically the forward returns are very good over the next one month and next three-month time period. so we're looking at the weakness over the last five or six weeks as a buyable circumstance. we think the trend is still up here. >> yeah. when we look at gold, right, what can we glean, i guess, from the technicals on what gold is doing relative to the s&p? >> well what really strikes me this is the first time in almost a decade that equities are
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actually outperforming gold. this is a chart of stocks relative to gold. this is also the first correction i can remember in about five or six years where equities are actually outperforming gold. i think that's a very healthy development that stocks are leading hard assets really for the first time in about ten years. >> many people are saying, you know, the market cannot take its next leg higher unless the financials are one of the sectors, one of the key ones anyway, that lead the way. do you believe that? >> well i think that's what's been so encouraging about the last five or six weeks. despite all the volatility in the equity markets, financials and banks have been leadership. this is a chart of the u.s. bank index versus the s&p 500. we're making new relative price highs on banks versus the s&p 500 and again this is the first pullback or first -- that i can remember in four or five years where financials are not at the center of the storm. i think that's a really healthy development that the banks are
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not being treated like they used to be. >> big banks versus smaller banks. what are you telling me with the regionals? >> look at the regionals. there's a lot of good charts in the group. one we brought along, mtb, coming out of a nice base over the last few weeks. we think this chart is worth 130. we're buyer of dips. i would also say keycorp, comerica, we wills fargo, u.s. bnk, all good charts within a sector with a lot of relative leadership behind it. >> chris good to talk to you. do you guys want to kick this around for a second? i know guy and grasso, you guys are the technicians here. >> well, you know, we talked about the outside reversal of the week last week. i know chris probably started that. may 22nd was a destructive day. as far as his view on the banks. i'm in accord. he mentioned a couple others. that's really where the strength is. i think the strength lies in the fact that management has been very conservative over the last few years. >> i would say that you have to test that 1555 level again.
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chris would probably disagree with me, that it would probably be unhealthy to test it again because the more times you knock at the door the more likely it is to break through it. i would like to see a test before i increase my holdings. >> show me nike i want to look at what the stock is doing after hours. it looks to be doing that. the company saying it sees lower china revenues. what was the time frame, guys, that it's seeing that? there it is. lower china revenue ft. first half of the new fiscal year. it's a closely watched metric. as you look at this stock, you have to i guess start thinking about if the global economy is not performing up to the level that people hoped that it will it's going to hurt these multinationals specifically nike. >> yeah, but that stock is up for a reason. it's an interesting price point. it's a middle class luxury item
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so it has a wide bandwidth globally of demand even in a weakening china, nike can still do pretty well in this environment. >> also why the conference calls matter so much. a stock initially reacts off the earnings beat or a miss but when the conference call happens and you get the comments from the ceo or the president or the cfo, whoever, making, you know, the forward looking statements, that's what affects the stock more than anything. >> i agree. but there's something -- we want to bring up about china before we go to break. china can fall down or go into a recession and these multinationals could pick it up in other parts of the world. >> still ahead it's a stock that's been lighting up your portfolio with a 65% gain this quarter alone, but is the company now too hot to handle at this point? guy adami taking on mike khouw in a solar street fight you will not want to miss. me of style and sophistication. but to us, less isn't more. more
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1-800-345-2550 until i choose to focus on something else. tdd# 1-800-345-2550 [ male announcer ] all this with no trade minimums. tdd# 1-800-345-2550 and only $8.95 a trade. tdd# 1-800-345-2550 open an account with a $50,000 deposit tdd# 1-800-345-2550 and get 6 months commission-free trades. tdd# 1-800-345-2550 call 1-800-578-4439 tdd# 1-800-345-2550 and a trading specialist will tdd# 1-800-345-2550 help you get started today. welcome back. the world's largest maker of solar power plants first solar is the second best performer in the s&p in the last year. and shares have almost quadrupled. will this company stay red hot or will you get burned? we have a street fight. guy is the bull mike is the bear. >> i think it can stay hot,
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judge, and i think for a couple reasons. the first two are trading reasons. we topped out of 59 earlier in may. traded down to 24.5 in march. the recent low of 41.5 is an exact 50% retracement of that range, and we've sort of bounced since. 30% short interest even mike can't argue against this. these heavily shorted stocks have been death to bet against. then fundamentally, it's not that expensive on a valuation basis. and if you look and you never buy a stock with a takeover in mind but you know what? with a $3.8 billion market cap with companies getting more industrial, these stock that is make money which first solar does might actually be in play. i think it's sort of interesting here. >> it's true this is one of the few solar companies that actually does make money. why is that? that's because this is actually a bad business. and you can see that because actually what we're expecting them to make in 2014 is less than half of what they made just a couple years ago.
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that's the reason the multiple is so low. their earnings are going down and down and down. they rely heavily on government incentives and we're seeing, you know, these guys are basically selling to themselves. they build plants and the other issue is take a look at some of the plants. we have had two solar projects cancelled in california just within the last year. if you're going to buy a business because it's a cheap valuation, at least buy a good business. the solar business is not that great. >> all fair points. solar business is lousy, but you would admit that this is the best in a lousy space and i do think the stock is interesting here. there's the buzzer. i think we both made compelling arguments there judge. >> easy for you to say. let's go to dan nathan. >> ynt do you let us be the judge. they both make good points. i think to guy's point, i think you want to buy this thing when it comes down. i would be intrigued in the low 30s. as far as mike is concerned, i think you want to avoid making new long bets -- >> that's an important point.
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>> who won? >> do you run out and buy it right here, i don't think so? >> tell us who you think won that street fight. tweet us @cnbcfastmoney. use the hash tag bull or bear. coming up on mad money, cramer's invest in america series continues with an all-star triple threat schultz, lundgren mullally. do not miss. the ceos of ford, starbucks, and macy's. that is ahead. still ahead, a trade school inception for steve grasso. he'll teach you how to manage a losing trade after the break. (announcer) at scottrade, our clients are always learning more to make their money do more. (ann) to help me plan my next move i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way.
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and because usaa's commitment to serve military members, veterans, and their families is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve. not so fast steve grasso. our traders are quick but they're not always right. earlier in the month, he made a bearish call on one internet radio name. let's listen. >> so much competition in the space. even though there was a headline coming out they're coming out with a tv platform for xbox and playstation playstation. it's too crowded of a spot, i wouldn't be a buyer. >> since he made that call pandora is up about 26%.
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>> now -- >> they got an upgrade yesterday. >> i didn't say i would be a seller. >> okay. >> a little semantic issue there. especially the short interest in the name -- >> what do you do here though? some of these fears seem to be overblown. >> to pandora's credit, every time there is a competition scare, they just shake it right off. >> it helps when someone on the street comes along and upgrades the stock. >> i still think they're going to be challenged. i still think there is competition out there. would i short the name? no but i still wouldn't buy the name. >> okay. moving on you tweet it, we trade it. let's get to some of your tweets to our crew today. guy, when will ebay get some mojo. >> i know people think technicals are voodoo but ebay, look at it. it traded up to 58.5 the exact same high we made in '04-'05. you have a monster double top.
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valuation starts to come into play 17 times forward earnings. i get the pay pal thing but this is exact same move we saw over the last year year and a half as we saw into '04-'05. it wouldn't surprise me to see this stock trade below 50. >> qualcomm what's the problem, aside from the fact that the stock does nothing? >> it's down on the year. it's massively underperforming. the seem my conductor index. i'm long august calls. i think their q2 earnings should be the next catalyst. a lot of people are expecting low end snap dragon chip to be in any low end iphone. this would be the catalyst to own the stock. >> what do you think the problem has been? got to be one of the most loved yet most underperforming -- >> they have a $5 billion share buyback. they have 30% of their market cap in cash, expect to grow at double digits. i like it here. >> your first move tomorrow when we come back. that's up next.
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♪ ♪ wg welcome back. take a look at shares of nike. pretty good reverseal in the after hours after an earnings beat. the stock has reversed into negative territory because of the conference call. the company saying it sees lower china revenues in the first quarter. that's certainly a negative.
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gross margins will be essentially flat as well. two things the street didn't want to see. grasso, give me a ticker. >> micron. >>all-state. >> i am scott wapner. mad money starts now. >> my mission is simple. to make you money. i'm here to level the playing field for all investors, but there's always a work somewhere and i promise to help you find it. mad money starts now. hey, i'm cramer. welcome to "mad money." other people want to make friend, i'm just trying to make money. call me -- one week ago, i adopted a radical position. froms i went on
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